I.O.U.S.A. is a documentary that enjoyed limited release in theaters (and is soon-to-be released on DVD) that takes the at-times abstract concepts of economics and makes them understandable - specifically, the ramifications of the U.S. economy at the precipice of disaster due to the national debt, personal debt, the trade deficit, and the looming demographic tsunami of retiring baby-boomers.
The above video is a "short" (30 minute) version of the documentary.
You can't afford to "ostrich-head" this matter away. If you have a family, you really should have a look.
This movie is really good at scaring you. Some of the projections are absolutely bone-chilling. But it largely overstates the problem — the deficit is currently at a manageable level of 3% of GDP. And we need to run a deficit in this economic downturn to ensure we don’t have skyrocketing rates of unemployment. The flim also ignores one of the best solutions to the “problem” — health care reform. If our health care system were as efficient as other industrialized nations, and if Medicare/Medicaid were able to take advantage of these lower costs, then our deficit problem would basically disappear. Check out the Center for Economic and Policy Research, they have a nice graphic that demonstrates this well: http://www.cepr.net/calculators/iousadeficit/calc_iousa_deficit.html
ReplyDeleteDear Matt:
ReplyDeleteOf course, the budget deficit is only part of the problem. That, combined with the complete lack of savings, the economy built completely on borrowing and consuming, the trade deficit and the fact that much of our debt is held by hostile countries, the threat that the USA may well lose its AAA credit rating (not to mention currency reserve status), and the ever-increasing promises of government benefits combined with tax cuts - complicates the problem significantly.
If we took hard steps now, we could stave off disaster. Health care is an important part of the puzzle. So is defense spending. So is Social Security. But we simply can't continue to promise the world to everyone and never increase revenues. Nor can we tax our way to prosperity, nor do what the Central Bank of England has just done, and reduce the interest rate to zero.
There has to be a fundamental change in priorities, and soon - before it does get out of control. But what are we doing instead? Promising trillions of dollars in off-budget "bailouts" to failing businesses, and nationalizing bad debt.
That's not moving us in the right direction at all.
I don't know why you would put the word "problem" in quotes. The deficit is a problem. It is always a problem when any entity - be it a household or a corporation - spends more than its income. You can only do that for so long until there is a crash. Now, it may well be a problem with a solution, but it is still a real problem and a serious problem.
I think it also bears note that the Center for Economic and Policy Research is a self-described "progressive" (which is, of course, a euphemism for left-wing) think tank. They have an admitted bias for big-government solutions. It is unlikely that any of the economists at the CEPR operate under the Austrian Economic School, for example.